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Do Kwon: FTX’s Bankman-Fried faces market manipulation probe

Terra ecosystem and FTX:

Federal prosecutors are looking into the potential involvement of FTX and Alameda in the demise of Terra LUNA as part of a more extensive investigation into the collapse of FTX.

Federal U.S. prosecutors are looking into whether Sam Bankman-Fried, the former CEO of FTX, used market manipulation techniques to cause the collapse of the Terra ecosystem.

According to a December 7 article from The New York Times (NYT), the prosecutors are looking into whether Bankman-enterprise Fried’s purposefully sparked a flurry of “sell” orders on Terra’s algorithmic stablecoin TerraClassicUSD, USTC, as part of a more extensive investigation into FTX’s collapse (formerly UST).

It was claimed that the unexpected rise in UST sell orders made it challenging to match them with comparable “buy” orders, which increased downward pressure on UST’s price and caused it to depeg from its intended 1:1 ratio with the U.S. Dollar.

Terra crash:

As the two cryptocurrencies were intended to be linked, the events also caused Terra Classic, LUNC (formerly LUNA), the native token of Terra, to crash.

Although the exact reason for the fall of LUNC and USTC in May remains unknown, it is clear that most of the sell orders for USTC originated from Bankman-trading Fried’s company Alameda research, according to the NYT.

According to a source who spoke to NYT, Alameda Researched also made a sizable wager on the price of LUNC dropping.

According to NYT, Bankman-Fried stated that he was “not aware of any market manipulation and certainly never meant to engage in market manipulation,” as he has done with most of his remarks since FTX’s demise.

To the best of his knowledge, all the transactions were made to hedge or invest.

Do Kwon tweet:

Do Kwon, the CEO of Terraform Labs, tweeted on November 8 to his 1 million followers in response to the current report, saying it was time for Genesis Trading to be transparent about an alleged $1 billion UST loan to “SBF or Alameda” just before Kwon’s Terra ecosystem collapsed.

Kwon further claimed that Alameda “traded 500MM UST in minutes to deplete its curve pools during the MIM crisis,” which caused a significant currency contraction in UST in February 2021.

Kwon continued, “What was done in the dark will be revealed.”

Conclusion:

US prosecutors are investigating whether Bankman-Fried’s empire used “market manipulation tactics” to cause Terra’s May collapse.

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